If You Have A Fire Don’t Get Burned By: Peter L. Obremskey and Michael L. Schultz

III. Coverage.

The insurance agent has dictated the information contained in the application, photographs submitted to the company, and the desires of the insured to obtain maximum coverage. It is important, on the other hand, that the coverage provided has a relationship with the fair market value or actual cash value of the building being insured. That is to say, if the building is over-insured for its value, the insured may bear some of the risk of the loss, or have coverage denied. The same is true if the building is insured for less than its actual cash value as then the 80/20 provision applies which dictates that the insurance coverage must be at least 80% of the actual cash value of the property.

Once the amount of coverage is determined for the main building or home, the other coverages generally fall into place as the insurance provided to other related buildings on the property are generally 10% of the face of the building coverage, and the coverage provided for the personal property is, as a rule of thumb, 75% of the value of the building. These personal property coverages can be increased and specific items can be insured if necessary.

Debris removal and other related coverages are also tied to the building coverage. Thus, a building that is insured for $100,000 would usually have $10,000 coverage on other buildings, $75,000 coverage on personal property, and the debris coverage would be $5,000, generally 5% of the face of the policy.

IV. Your Insurance Agent.

The first call after a fire will be to your insurance agent, in many cases a friend, a neighbor, and a respected member of the community. You have placed your trust and confidence in him in providing you with the maximum protection for your business and homeowners insurance coverage. Hopefully, the insurance agent has placed your coverage with a reputable company whom he believes will provide you with coverage for all catastrophic events if it becomes necessary to call upon them for your protection. A reputable insurance agent should come to your aid and in some cases, depending on how close your relationship, may very well come to the scene of the loss in an effort to console you and provide you with immediate assistance on how to begin the process of adjusting your loss. The agent will have readily available the phone number and perhaps even the name of the insurance adjustor who will handle the adjustment process. He will immediately notify the company of the loss and within hours, an insurance adjustor will be assigned to your claim and may very well be in contact with you. That will be the end of your insurance agent. He will step out of the picture and get as far away from the adjustment of the claim as possible. All further inquiries to him will be immediately referred to the insurance adjustor, and the agent will provide little or no further assistance in resolving the loss. The insurance agent is well-aware of the fact that in finalizing your claim there may be many disagreements and disputes, and the insurance companies do not want their insurance agent to be involved in dealing with resolving those issues. The insurance agent desires to remain your friend and your neighbor and continues to want to sell you insurance. As a result, he does not want to be a party to any unpleasantness that might arise as a result of the claims process. So long insurance agent.

(Part 2 of 7. Part 3 will be posted on 5/31/10.)

The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.

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